Consumption Rules Research Articles

Kontrollierter Konsum von Opiaten und Kokain

In this article self-controlled consumption of legal or illegal drugs is defined as a drug use pattern which follows self-imposed consumption rules or plans. Self-controlled use of drugs such as heroin or cocaine without negative health, social or criminal consequences is a more widespread phenomenon in European countries as one might expect. Moderate and self-controlled drug use is not only prevalent among socially integrated consumers. Also formerly dependent drug users who overcame their addiction with or without professional help are able to develop a controlled drug use pattern. By now, there are different behavioural self-control trainings for reducing drug use. First results of evaluation studies indicate positive effects of such interventions. There is a need to introduce self-control programmes in the drug care system for drug users who are not able or not willing to live abstinent.

Nicchie produttive e innovazione di sistema: un'analisi secondo l'approccio delle transizioni tecnologiche attraverso il caso dei farmers' markets in Toscana

The paper deals with the nature and the role of niches, an issue that is crucial in the evolution from the economy of quantity to the economy of quality. For a long time this word has had a negative meaning in agricultural economics: the niche strategy was considered as a dead end, as symptomatic of weakness, an obstacle to the modernisation of the agri-food system. With the transition to the economy of quality this negative connotation has progressively eased and, instead, there is an increasing empirical evidence of the success of niche strategy for smallmedium scale food enterprises. However, the growth of the number of actors, of the variety of products and needs and of the opportunities offered by globalisation demands a further effort to adjust the conceptual models. In particular, there is a need for an analysis of niches as an important evolution context in the agri-food system and as possible area for innovation policies. Applied in the agri-food system, this approach allows to answer to the rising problem of the transition to more sustainable food systems. In other words, niches represent spaces of experimentation of new rules of consumption, production, research, social organisation, which can be successful the moment the external conditions change, or that can contribute to change the context through their growth. After some brief theoretical considerations, the paper analyses through this key to the reading the experience of farmers markets, and highlights potentials and limits for their growth. The key adopted allows to examine the distinctive features of this experience and to follow their evolution. For this purpose, it is useful the analysis of the network of actors involved, of the set of principles and rules adopted within it, of the set of material resources mobilised. Moreover, it allows to assess the role of farmers markets in fostering system innovation processes, by highlighting the dynamics that are developing within the niche and the strains that it put on the regime. The paper ends with some final remarks on the factors that can affect the expression of the innovative potential of these niches.

An electrical evaluation method for the silicidation of silicon nanowires

Physical and electrical properties of PtSi nanowires (NWs) fabricated on a silicon-on-insulator wafer are investigated. The Si consumption rule in NW silicidation is consistent with that of planar process. The cross-sectional area ratio between PtSi NW and Si NW is about 1.5:1. An electrical method is used to evaluate the silicidation degree of NWs. According to the dependence of the current passing through the NW on the backside substrate voltage, we can determine whether the Si NW is fully or partially silicided. The electrical evaluation results are in agreement with transmission electron microscopy inspections.

QUEST III: An estimated open-economy DSGE model of the euro area with fiscal and monetary policy

This paper develops a DSGE model for an open economy and estimates it on euro area data using Bayesian estimation techniques. The model features nominal and real frictions, as well as financial frictions in the form of liquidity-constrained households. The model incorporates active monetary and fiscal policy rules (for government consumption, investment, transfers and wage taxes) and can be used to analyse the effectiveness of stabilisation policies. To capture the unit root character of macroeconomic time series we allow for a stochastic trend in TFP, but instead of filtering data prior to estimation, we estimate the model in growth rates and stationary nominal ratios.

Does it pay to be SMarT?*

AbstractThe Save More Tomorrow™ (or SMarT) plan has proven effective in raising employee saving rates and appears to be popular among participants and the media. An important question has remained on the minds of economists despite this success: just how close does the prescriptive SMarT plan come to approximating the normative life-cycle/permanent-income consumption rule? That is, does it pay (in a lifetime utility sense) to participate in a SMarT plan? We attempt to provide some rigorous answers to this question by employing a quantitative-theoretic model to perform dynamic welfare analysis, and our results tend to support the SMarT plan as a decent first approximation to the life-cycle/permanent-income rule. We also consider the problem of an altruistic employer seeking to maximize the lifetime utility of employees by appropriately choosing the default SMarT parameters in the face of employee heterogeneity in saving rates and uncertainty about whether they will actually stick with the plan. The employer's problem is augmented to include employee heterogeneity concerning risk taking, and we also consider the possibility that SMarT saving may be met with increased borrowing.

Grasshoppers, Ants and Pre-Retirement Wealth: A Test of Permanent Income Consumers

In this paper, it is shown that households who enter retirement with lower than ‘normal’ wealth do so because they had consistently followed near-sighted consumption rules during their working years. Using the Panel of Income Dynamics (PSID), household wealth in 1989 is predicted for a sample of 50-65 year old non-retired households using both current and past income, occupation, demographic and health characteristics. Using the residuals from this first stage regression, the sample of pre-retired households can be subsetted into households who save ‘lower’ than predicted and all other households. By construction, these households had similar opportunities to save; the average household in both these sub-samples is identical along all observable income and demographic characteristics. It is then shown that households in the low wealth residual sample had much larger declines in consumption upon retirement. It appears that retirement came as more of a surprise to these households. In the main part of the paper, I use the panel component of the PSID and analyze the consumption behavior of these households early in their lifecycle. It is shown that these low pre-retirement wealth households had consumption growth that responded to predictable changes in income during their early working years. No such behavior was found among the other pre-retired households. Moreover, the low residual households responded both to predictable income increases as well as predictable income declines, a result that is inconsistent with a liquidity constraints explanation. After ruling out other theories of consumption to explain these facts, it is concluded that households who entered retirement with lower than predicted wealth followed some near-sighted consumption rule of thumb early in their working lives.

The Right Way to Regulate Violent TV

Use of the wide variety of available technological controls, household media rules and other private sector efforts are a much better alternative to government regulation to address concerns about children's exposure to violence on television. Lawmakers should be wary of policies that could be struck down in court as unconstitutional, considering recent decisions that have ruled in favor of a least restrictive alternative and away from broad, government-imposed censorship. Numerous tools and methods, both technical and non-technical, which can be used to control what media content children are exposed to in the home, include private ratings systems, V-chips, personal video recorders, controls provided by cable and satellite providers, and formal or informal household media consumption rules. Concerned parents and others can work with third parties to gather information and even work within the media marketplace to influence what fare is shown on broadcast and cable television, by making use of ratings and reviews provided by independent organizations and the many educational efforts aimed at teaching adults about parental controls available for all types of media, including television, movies and games. But if, for whatever reason, some parents are not taking advantage of these tools and options, their inaction should not be used to justify government regulation of programming as a surrogate for household/parental choice.

An equilibrium model of wealth distribution

I present an explicitly solved equilibrium model for the distribution of wealth and income in an incomplete-markets economy. I first propose a self-insurance model with an inter-temporally dependent preference [Uzawa, H. 1968. Time preference, the consumption function, and optimal asset holdings. In: Wolfe, J.N. (Ed.), Value, Capital, and Growth: Papers in Honour of Sir John Hicks. Edinburgh University Press, Edinburgh, pp. 485–504]. I then derive an analytical consumption rule which captures stochastic precautionary saving motive and generates stationary wealth accumulation. Finally, I provide a complete characterization for the equilibrium cross-sectional distribution of wealth and income in closed form by developing a recursive formulation for the moments of the distribution of wealth and income. Using this recursive formulation, I show that income persistence and the degree of wealth mean reversion are the main determinants of wealth-income correlation and relative dispersions of wealth to income, such as skewness and kurtosis ratios between wealth and income.

Optimal life insurance purchase and consumption/investment under uncertain lifetime

In this paper, we consider optimal insurance and consumption rules for a wage earner whose lifetime is random. The wage earner is endowed with an initial wealth, and he also receives an income continuously, but this may be terminated by the wage earner’s premature death. We use dynamic programming to analyze this problem and derive the optimal insurance and consumption rules. Explicit solutions are found for the family of CRRA utilities, and the demand for life insurance is studied by examining our solutions and doing numerical experiments.

An Equilibrium Model of Wealth Distribution

I present an explicitly solved model for the distribution of wealth and income in an incomplete-markets economy. I first propose a consumption model with an inter-temporally dependent preference (Uzawa (1968) and Obstfeld (1990)). I then derive an analytical consumption rule which captures stochastic precautionary saving motive and generates stationary wealth accumlation. Finally, I provide a complete characterization for the equilibrium cross-selectional distribution of wealth and income in closed form by developing a recursive formulation for the moments of the distribution of wealth and income. Using this recursive formulation, I show that income persistence and the degree of wealth mean reversion are the main determinants of wealth-income correlation and relative dispersions of wealth to income, such as skewness and kurtosis ratios between wealth and income.

Using the Concept of Food Based Dietary Guidelines to Develop an Optimized Mixed Diet (OMD) for German Children and Adolescents

To apply for the first time FAO/WHO standards for Food Based Dietary Guidelines (FBDG) to develop a total diet concept named Optimized Mixed Diet (OMD) for children and adolescents in a European country. Exact 7-day menus were composed for sample age groups of children (4-6 years) and adolescents (13-14 years), taking into account the German meal patterns, common non-fortified foods, and sensory preferences of children (practical criteria). Food amounts and food selection within the menus were optimized so far as to achieve a total of reference intakes for 22 nutrients (scientific criteria). Simple food based messages were deduced. Compared to the existing high-fat, low plant food diet reported from the DONALD Study (Dortmund Nutritional and Anthropometric Longitudinally Designed Study), the OMD is lower in fat and saturated fatty acids and contains ample amounts of plant foods. Reference nutrient densities for age groups between 1 and 18 years were achieved or exceeded, except folate. Foods from the optimized menus were summarized into 11 food groups based on nutritional and practical considerations. Proportions of food groups by weight are independent of age and can be used to recalculate food amounts for various age groups or energy requirements, respectively. For simplification, "recommended" foods were distinguished from "tolerated" foods by their nutrient densities; based on food amounts, 3 simple rules for food consumption were deduced, i.e. beverages and plant foods: ample; animal foods: moderate; high-fat, high-sugar foods: sparingly. Exact menus and food amounts are a prerequisite to ascertain nutrient adequacy of FBDG. The OMD demonstrates that a single diet concept with a core of quantified food groups can be adequate for age groups between 1 and 18 years within a country, such as Germany.

The Influence of Assortment Structure on Perceived Variety and Consumption Quantities

Increasing the actual variety of an assortment has been shown previously to increase the quantity consumed. We show, however, that consumption quantities are also influenced by the perceived variety of an assortment. In combination, six lab and field studies show that the structure of an assortment (e.g., organization and symmetry or entropy) moderates the effect of actual variety on perceived variety. We further show that it is perceived variety that in turn influences consumption quantities through anticipated consumption utility. Making salient other consumption rules, such as size of the assortment, moderates this effect. These findings are of immediate relevance to interdisciplinary researchers and to consumers and health practitioners who wish to better control food consumption.

Manipulation of optimal matchings via predonation of endowment

In this paper, we answer a question posed by Math.soc.sci 44 (2002) 65 on the manipulability of optimal matching rules in matching problems with endowments. We characterize the classes of consumption rules under which optimal matching rules can be manipulated via predonation of endowment.

Milpa As an Ideological Weapon: Tourism and Maya Migration to Cancún

The article analyzes the phenomenon of tourism within the current globalizing and postmodern contexts. It is based on the cultural relationship between Chan Kom, a Maya community in the Yucatán Peninsula, and Cancún, the international tourist emporium. The tourist culture of Cancún embeds rules of production and consumption radically different from those encapsulated in the milpa or cornfield ideology that Maya experience in their communities. The study presents a dialogue between Chan Kom's social fragmentation due to out-migration to Cancún and the Mayanization of the socioeconomic and cultural landscape of the international Cancún. The goal is to discover the kaleidoscopic representations of Cancún as a tourist market product through the prism of the Maya ideological and socioeconomic presence.

Caballero Meets Bewley: The Permanent-Income Hypothesis in General Equilibrium

The permanent-income hypothesis (PIH) of Milton Friedman (1957) states that the agent saves in anticipation of possible future declines in labor income (John Y. Campbell, 1987). He also saves for precautionary reasons, and dissaves because of impatience. To justify the PIH in an intertemporal optimization framework, it has been conventional to assume both (i) quadratic utility, to turn off precautionary motives (Robert E. Hall, 1978), and (ii) equality between the subjective discount rate and the interest rate, in order to rule out dissavings for lack of patience. Neither assumption is plausible. Much work on consumption in the past decade has focused on individual’s precautionary savings motives and liquidity constraints. Impatience is a standard result in heterogeneousagents general-equilibrium incomplete-markets models, generally known as Bewley models. This paper shows that the PIH is in any case the optimal rule, in a Bewley model, in which each agent solves the precautionary-savings model of Caballero (1990, 1991). In addition to the demand for savings for a “rainy day,” Caballero’s model also predicts a constant precautionary-savings demand and constant dissavings due to impatience. In equilibrium, I show that these two forces must cancel each other. As a result, the agent behaves in accordance with the PIH. Section I describes the model. Section II concludes. The Appendix provides a heuristic derivation and a proof of the optimal consumption rule.

Manipulability of the men- (women-) optimal matching rule via endowments

We consider matching problems with endowments and analyze the manipulability of the men-optimal and the women-optimal matching rule via hiding, perfect hiding, destruction, and predonation of endowments. We show that the men- (resp., women-) optimal matching rule is manipulable by women (resp., men) via both types of hiding, as well as by destruction and by predonation of their endowments. In contrast, so long as the hidden part of one’s endowment cannot be consumed alone, a man (resp., woman) can manipulate the men- (resp., women-) optimal matching rule only by predonating a portion of his (resp., her) initial endowment (to men or women). We consider the manipulability of matching rules under monotonic consumption rules. We show that the men-optimal matching rule is non-manipulable via hiding by a man under any monotonic consumption rule. We also characterize the maximal subclass of monotonic consumption rules under which a woman can manipulate the men-optimal matching rule via destruction (or via hiding). We offer a similar analysis for the manipulability of the men-optimal matching rule via perfect hiding.

Sovereign Debt Contract and Optimal Consumption-Investment Strategies

We present a model in which a sovereign country optimally decides on its consumption and investment policies. In the paper we allow for the sovereign borrower to keep the fraction of his augmented wealth in so-called international reserves. We further assume that these reserves can be deposited at the risk-free rate. In this framework we obtain analytical solutions for optimal consumption and investment rules, as well as formulas for optimal default boundary and the value of the risky loan. In the paper we assume that in the case of default the lender can impose economic and political sanctions against the borrower and also can seize an implicit collateral. However, it is shown that only sanctions are necessary for the existence of positive lending equilibrium. We also show that when the country is getting very close to its default wealth level, then its relative risk aversion decreases and the country increases its consumption rate and the risky investment fraction at the expense of available liquid reserves.

On Measuring the Economic Significance of Asset Return Predictability

A number of recent studies have measured the quantitative effect of excess return predictability on the optimal consumption and portfolio choices of a rational investor, and they have used the utility costs of ignoring predictability as a natural measure of economic significance. We use a general equilibrium model as a laboratory for generating predictable excess returns and for assessing the properties of the estimated consumption/portfolio rules, under both the empirical and the true dynamics of excess returns. We find that conditional rules based on ordinary least squares estimates of excess returns are severely biased, and they have a large variance across multiple simulated histories of the model. In this experiment, we find the estimation issues to be so severe that the simple unconditional consumption and portfolio rules, from Merton (1969), actually outperform (in a utility cost sense) both simple and bias-corrected empirical estimates of conditionally optimal policies.

When conspicuous consumption becomes inconspicuous: the case of the migrant Hong Kong consumers

Hong Kong is often portrayed as a society where conspicuous consumption rules. We wanted to find out whether this peculiar consumer behavior would still be transparent among Hong Kong people who have emigrated to Canada. Through a survey, we tested the subjects’ propensity towards conspicuous consumption (as measured by two established scales) and attempted to find relationships between the dependent variables and a person’s ethnic identification as well as the strength of the person’s ethnic social ties. We failed to find support for the proposition that conspicuous consumption is related to a person’s ethnicity. Offers explanations and directions for future research, and also serves as a warning to the marketer that blindly accepting stereotypes could be erroneous in a practical as well as moral sense.

The Permanent Income-Life Cycle Hypothesis in a Monetary Economy and the Neutrality of Money: A Continuous-Time Analysis

This paper addresses the viability of the permanent income– life cycle hypothesis in a monetary economy in which money enters the utility function of infinitely lived agents. Two forms of the hypothesis are distinguished: weak and strong. Deriving the Keynes–Ramsey rule of consumption under preferences of the Uzawa–Epstein recursive class and examining the optimal consumption–wealth relation, the paper studies the restrictions that these forms impose on the utility functional, identifies the necessary and sufficient conditions for the hypothesis to hold, and clarifies how such conditions are related to the neutrality of money. JEL Classification Numbers: D91, E21, E40, C61.